From boom to bust to rust, big projects languish in Brazil

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A deserted house stood in the shadows of an abandoned railway bridge near Paulistana.

By Simon Romero
New York Times
April 13, 2014

PAULISTANA, Brazil — Brazil plowed billions of dollars into building a railroad across arid backlands, only for the long-delayed project to fall prey to metal scavengers. Curvaceous new public buildings designed by the famed architect Oscar Niemeyer were abandoned right after being constructed.

There was even an ill-fated UFO museum built with federal funds. Its skeletal remains now sit like a lost ship among the weeds.

As Brazil sprints to get ready for the World Cup in June, it has run up against a catalog of delays, some caused by deadly construction accidents at stadiums, and cost overruns. It is building bus and rail systems for spectators that will not be finished until long after the games are done.

But the World Cup projects are just a part of a bigger national problem casting a pall over Brazil’s grand ambitions: an array of lavish projects conceived when economic growth was surging that now stand abandoned, stalled, or wildly over budget.

The ventures were intended to help propel and symbolize Brazil’s seemingly inexorable rise. But now that the country is wading through a post-boom hangover, they are exposing the nation’s leaders to withering criticism, fueling claims of wasteful spending and incompetence while basic services for millions remain woeful.

Some economists say the troubled projects reveal a crippling bureaucracy, irresponsible allocation of resources, and bastions of corruption.

Huge street protests have been aimed at costly new stadiums being built in cities like Manaus and Brasília, whose paltry fan bases are almost sure to leave a sea of empty seats after the World Cup events are finished, adding to concerns that even more white elephants will emerge from the tournament.

“The fiascos are multiplying, revealing disarray that is regrettably systemic,” said Gil Castello Branco, director of Contas Abertas, a Brazilian watchdog group that scrutinizes public budgets. “We’re waking up to the reality that immense resources have been wasted on extravagant projects when our public schools are still a mess and raw sewage is still in our streets.”

The growing list of troubled development projects includes a $3.4 billion network of concrete canals in the drought-plagued hinterland of northeast Brazil, which was supposed to be finished in 2010, as well as dozens of new wind farms idled by a lack of transmission lines and unfinished luxury hotels blighting Rio de Janeiro’s skyline.

Economists surveyed by the nation’s central bank see Brazil’s economy growing just 1.63 percent this year, down from 7.5 percent in 2010, making 2014 the fourth straight year of slow growth.

While an economic crisis here still seems like a remote possibility, investors have grown increasingly pessimistic. Standard & Poor’s cut Brazil’s credit rating last month, saying it expected slow growth to persist for several years.

Making matters tougher for the government, it is an election year, with a poll last month showing support for President Dilma Rousseff’s administration falling to 36 percent from 43 percent in November as sluggish economic conditions persist.

Rousseff’s supporters contend that the public spending has worked, helping to keep unemployment at historical lows and preventing what would have been a much worse economic slowdown had the government not pumped its considerable resources into infrastructure development.

Luiz Inácio Lula da Silva, Rousseff’s political mentor and predecessor, put many of the costly infrastructure projects into motion during his administration, from 2003 to 2010.

In a recent interview, he acknowledged that some of the ventures were facing long delays. But he contended that before he came into office, Brazil had gone for decades without investing in public works projects, so the country essentially had to start from scratch.

“We stayed for 20 years without making or developing any public infrastructure projects,” da Silva said. “We had no projects in the drawer.”

Still, a growing chorus of critics argues that the inability to finish big infrastructure projects reveals weaknesses in Brazil’s model of state capitalism.

First, they say, Brazil gives extraordinary influence to a web of state-controlled companies, banks and pension funds to invest in ill-advised projects. Then other bastions of the vast public bureaucracy cripple projects with audits and lawsuits.